ContiBeef and Smithfield Foods to form joint venture
American cattle feed producers ContiBeef LLC, a subsidiary of ContiGroup Companies, Inc., and MF Cattle Feeding, Inc., a recently acquired subsidiary of Smithfield Foods, Inc., have agreed to form a 50/50 joint venture cattle feeding business. The new entity, whose name has yet to be determined, will include all six feedyards currently owned by ContiBeef and the four feedyards owned by
The new entity will have facilities in five states (
The joint venture will be a stand-alone operating company, independent from both ContiGroup Companies and Smithfield Foods. Finance for the venture will be provided through a combination of equity investments by ContiGroup Companies and Smithfield Foods and a non-recourse senior credit facility arranged by Rabobank International. Further financial terms of the arrangement were not disclosed.
Mike Thoren, currently president and CEO of ContiBeef, will take the role of president and CEO of the joint venture.
The new entity expects to formally commence operations by April 30, 2005. Both ContiBeef and Smithfield Foods' feedyards will continue regular operations throughout the transition to the new ownership structure.
Thoren stated that, "we expect a seamless transition for all of our customers."
ContiBeef is one of the largest cattle feeding operations in the world marketing over one million head of cattle annually, most of which are company owned. Its six feedlots in
Smithfield Foods, Inc., with annual sales of $10 billion, is a leading processor and marketer of fresh pork and processed meats in the
The transaction is subject to regulatory approval and execution of a definitive agreement.
